“After starting on the front foot, the FTSE 100 dipped in a seesaw start to the session. The index was dragged lower by financials ahead of this week’s UK Budget,” says AJ Bell Investment Director Russ Mould.
“A cautious mood pervaded despite Japan’s Nikkei 225 breaking new ground to trade above the 40,000 mark. The push for the index to new all-time highs is undoubtedly a key milestone but whether it truly marks an end to more than three decades of stagnation is still up for debate. One swallow doesn’t make a summer and the fact it has taken since 1989 for the index to claim a new record high is probably cause for some reflection rather than outright celebration.
“Later this week the latest decision on Eurozone interest rates and US jobs numbers may help to shape the narrative for stocks.
“Bitcoin is on the brink of hitting new heights – flirting with the $69,000 level it reached in November 2021. The launch of exchange-traded funds which track the cryptocurrency have provided a big catalyst.
“Demand for air travel was still very much in evidence in the latest passenger figures from Wizz Air and Ryanair, with both seeing double-digit increases in passenger numbers.”
Hipgnosis Song Fund
“The whole point of investing in a music royalties fund was to sit back and let the cash roll in, but dividends are no longer on the menu for Hipgnosis shareholders.
“A steady flow of money into the fund every time one of the songs in its catalogue was played on the radio, performed live, featured in a film or on TV should have created a nice pool of money from which to pay regular dividends.
“Amid all the turmoil around poor levels of corporate governance and stress on its finances, Hipgnosis last year said it would not pay another dividend until April 2024 at the earliest. It’s no wonder the share price has followed the words of David Bowie by ‘sinking into the quicksand’.
“Shareholders have now been dealt another blow after Hipgnosis ordered an independent valuation of its assets and the figure has come in a lot lower than the one last reported. As such, cash flow is now being prioritised to reduce debt so there will be no dividends for the ‘foreseeable future’. That news has taken the share price to a new record low and left shareholders wondering what’s next for the investment vehicle.
“Part of the original sales pitch was that Hipgnosis should have been uncorrelated to the markets and would therefore play a key role in helping to diversify an investment portfolio. What’s occurred is an inverse correlation – markets have gone up and its share price has gone down.
“The chaos around the management of the trust has been a big turn-off for investors and many may no longer consider music royalties to be the lower-risk, dependable asset class originally suggested. Hipgnosis has had its 15 minutes of fame and has now been cast aside like a one-hit wonder boyband. A comeback story could be a long way off, if there is even one at all.”
These articles are for information purposes only and are not a personal recommendation or advice.